An industry that realizes such large economies of scale in producing its product that single-firm production of that good or service is most efficient is called ?
Correct answer: B. a natural monopoly
- A. a fixed cost monopoly
- B. a natural monopoly
- C. a government franchise monopoly
- D. a economies of scale monopoly
Explanation
A natural monopoly arises when economies of scale are so large that one firm can supply the entire market at a lower average cost than several competing firms. The other options describe possible features or arrangements, not the standard term.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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